Duval v. Commissioner

J. E. DUVAL, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
Duval v. Commissioner
Docket No. 26559.
United States Board of Tax Appeals
21 B.T.A. 1357; 1931 BTA LEXIS 2210;
January 23, 1931, Promulgated

*2210 The determination by the Board of the tax liability of a transferor corporation is binding upon the transferee stockholders.

George E. H. Goodner, Esq., for the petitioner.
J. A. Lyons, Esq., for the respondent.

TRAMMELL

*1357 The respondent has asserted a liability as transferee of the assets of a dissolved corporation against the petitioner in the amount of $1,955.57. The errors assigned are: (1) That section 280 of the Revenue Act of 1926 is unconstitutional; (2) that the statute of limitations now bars the assessment and collection against this petitioner; (3) that the Commissioner is without authority to assess against the petitioner any interest or penalties which may have accrued upon the assessment against the dissolved corporation; (4) that the Commissioner has erroneously computed the 1919 tax liability of the dissolved corporation in that he has determined the tax *1358 on the basis of an eight-month period ending August 31, 1919, when there is no provision in the law for a return for the fractional part of a year for a dissolved corporation and in any event the period should be that which ended on July 30, 1919, instead*2211 of August 3, 1919; (5) that the Commissioner in computing the tax liability of the J. E. Duval Printing Co. for 1919 has erroneously disallowed certain salary deductions claimed.

FINDINGS OF FACT.

The petitioner was the owner of all of the capital stock of the J. E. Duval Printing Co. except one share which was owned by his wife and one share owned by his daughter. The tax liability of the J. E. Duval Printing Co. has heretofore been adjudicated by the Board and the amount of tax liability determined by the Commissioner of $1,955.57, of which only the amount of $1,400 was contested in of $1,955.57, of which only the amount of $1,400 was contested in that proceeding. The facts in that proceeding were stipulated, except those facts which were alleged in the petition and admitted in the answer. No testimony was introduced.

It was stipulated in that case that "The Commissioner's deficiency letter was mailed to taxpayer on December 27, 1924 * * *." It was also stipulated that the corporation was dissolved on August 31, 1919. After the dissolution of the J. E. Duval Printing Co. the petitioner took over the business and operated it as an individual. The balance sheet of the*2212 corporation shows that on August 31, 1919, the corporation had assets of a value of $28,470.68 and liabilities, exclusive of capital, surplus and undivided profits, in the amount of $7,612.51, or a net equity in its property in the amount of $20,858.17. The amount of the liability asserted against the petitioner as transferee is $1,955.57. The assets received by the petitioner as transferee of the dissolved corporation had a value at least equal to the amount asserted as a liability against the petitioner.

OPINION.

TRAMMELL: We think that there is no merit in the petitioner's contention as to the unconstitutionality of section 280 of the Revenue Act of 1926. ; ; ; certiorari denied, .

The question of the statute of limitations was waived by the petitioner in his brief.

On the question of the right of the Commissioner to assess against the petitioner any interest or penalties which accrued upon the assessment *1359 against the said dissolved corporation, this record*2213 does not present any facts showing that the Commissioner has undertaken to assess or collect any penalties. On the question of interest, section 280(a) provides that the "amounts of the following liabilities shall * * * be assessed, collected and paid * * *."

Section 280(a)(1) provides "The liability, at law or in equity, of a transferee of property of a taxpayer, in respect of the tax (including interest, additional amounts, and additions to the tax provided by law) imposed upon the taxpayer by this title or by any prior income, excess-profits, or war-profits tax."

We think that the above quoted provisions of the statute are sufficient to warrant the collection of any interest or other additions to the tax which were legally imposed upon the taxpayer and we think there is no merit in this contention of the petitioner.

The petitioner also contends that the determination by the Board of the tax liability of the taxpayer corporation is not binding upon this petitioner as transferee and seeks a reduction of the transferor's tax liability. He says that the Board was without jurisdiction to determine the issues presented in that proceeding, upon the ground that the letter upon*2214 which the taxpayer appealed was not a deficiency notice. On this question, however, in the proceeding of the taxpayer corporation the parties stipulated as we have set out in the findings of fact above. The jurisdiction thus appears not only on the face of the proceedings, but is established as a fact by stipulation of the parties adopted by the Board. While the Board is a tribunal of limited and special jurisdiction and its jurisdiction must affirmatively appear, in our opinion, when as here its jurisdiction appears in the pleadings, supported by stipulated facts adopted by it, its decision can not be collaterally attacked. See . The proceedings in the former hearing were offered in evidence by the petitioner, and he relies on those facts found therein which do not appear to be less favorable to him in this proceeding, and asks us to adopt in this proceeding certain of the facts found in the former proceeding, but has offered certain evidence and argument to show that certain stipulated facts in the former case are not true and that a different conclusion should have been reached in that case.

*2215 In our opinion, the determination of the tax liability of the transferor corporation is binding upon this petitioner as transferee, , and he may not now raise other issues which affect that tax liability already determined.

While the taxpayer corporation did not have a right to appeal from a decision of the Board in that case, it did have a right to institute a proceeding in court if it were dissatisfied with the decision of the Board.

*1360 On the question of the liability of the petitioner as transferee, we think that, when there is undisputed evidence showing the dissolution of the corporation, the amount of stock owned by the petitioner, the net value of the assets as shown by the books, and the continuation of the business formerly carried on by the corporation by the petitioner as an individual, we are warranted in holding that there is sufficient evidence to satisfy the requirements of the statute as to the burden of proof upon the respondent and that the respondent has thus made a prima facie case. If the assets were not worth the amounts shown by the books as being their net value, the petitioner after the above*2216 showing should have introduced evidence to the contrary. Certainly the book value of assets is some evidence and if there is no other evidence introduced we are warranted in basing our finding upon the uncontradicted evidence before us. In any event, the evidence in the record convinces us that the assets received by the petitioner as transferee on the dissolution of the corporation were at least equal in value to the liability asserted against him by the respondent.

Judgment will be entered for the respondent.